Minnesota Utility Sales Tax Exemption

Manufacturers and industrial processors with facilities located in Minnesota, may be eligible for a utility tax exemption. Minnesota offers an exemption from state and local sales tax on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by Minn. Admin. Rule 8130.5500(4a).

Exemption Language of Minn. Admin. Rule 8130.5500(4a)

"The purchase of fuel, electricity, gas, steam and water that is used or consumed directly in agricultural or industrial production is not taxable."

Utility Study Requirement for Exemption Qualification

A Minnesota utility tax study must list every piece of equipment used for production purposes and the annual consumption of each. The consumption of the production equipment is then compared to the actual utility consumption over 12 months to identify the exemption percentage. The State also allows a meter read method and meter disk method. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Minnesota Statute of Limitations on Tax Refund

3.5 years

State Sales Tax Rate: 6.875%

Average Local Sales Tax Rate: 0.58%

Helpful Resources

Minnesota Utility Exemption Certificate: Form ST3 Certificate of Exemption

Minnesota Utility Exemption Statute/Rule: Minn. Admin. Rule 8130.5500(4a)

Minnesota Claim Form for Tax Refund: Refund Request Form ST11